In 1998 General Cable Corp. had edged into global production, with 18 manufacturing facilities in three countries. Fast forward to 2012 and the Highland Heights, Ky.-based manufacturing firm has expanded to 47 manufacturing facilities across 25 countries.
It hasn't been an easy course. The company develops, designs and manufactures copper, aluminum and fiber optic wire and cable products for a variety of markets. The challenge General Cable faces is in differentiating itself from the competition when everyone largely uses the same raw materials, the same processing equipment from the same suppliers and then produces to a 90% common specification.
Some 10 or so years ago, senior leadership seized upon lean manufacturing as a means to differentiate the company, later complemented with a Six Sigma methodology. Lean's attraction for General Cable was both its waste-elimination component and its reliance on the talents of the entire workforce to continually improve.
"In order to have control of our destiny, we needed to have a best cost position," says Gregory Kenny, General Cable's president and chief executive officer.
Today, he says, "We've got an army of change agents who think about lean as a natural instinct as opposed to, 'Oh it's time to think about lean.' Making the company better continually has allowed us to really get through some tough times."
In 2011, two General Cable manufacturing plants earned the title of IW Best Plants winner in recognition of their achievements in operational excellence. Kenny and Mark Thackeray, General Cable's senior vice president of North American operations, recently spoke to IndustryWeek about the impact lean and Six Sigma have had on the company's bottom line and global growth, and the role senior management plays in driving a continuous-improvement culture.
IW: Does this focus on continuous improvement translate to bottom-line benefits? In what ways has it impacted the financial health of General Cable, the corporation?
GK: In North America, where we've been at it for a good 12 years we're going through a very difficult construction environment, and while not every one of our products is impacted directly by construction, North American demand is off from the '05-'06 peak, broadly, by 20% to 30%. Yet our operating performance -- everything from service metrics, lead times, working capital efficiency, SG&A -- is very good, and we're growing with our key customers. So we're making money in as difficult a time as we've ever seen from a macro environment.
Today our U.S. operations are operating at three or four times the profitability that they were in the last, much gentler down cycle [in 2001-2003]. That's a result, in good measure, of this lean journey, which is taking fundamentally tens of millions [of dollars] of waste out of the system.
IW: How so?
GK: We've run probably thousands of [improvement] projects over the last 12 years, and I would say the average project has a measurable payback of $10,000 to $100,000 -- sometimes much bigger. The cumulative effect of that is pretty profound.
Inventory Impacts Balance Sheet
GK: It's about control of inventory, which impacts the balance sheet. As you get faster and leaner, you're tying up less working capital. We know we have tremendous volatility in special chemical prices and metal prices, so if we could turn our inventory every day, we would. It's unlikely we'll ever get there, but our velocities are much higher.
I think we're known as a terrifically focused company on the supply chain and for delivery excellence. That causes you to become a preferred supplier so you actually grow with the stronger customers through a downturn. We've also taken it back into our supply base, and we do lean projects with them. Eliminating rework, scrap and variable spend also have been big.
[Lean] allows us to really stay in business and then stay in our strategic plan through a tremendous downturn. In fact, if you can push enough cash out you can actually buy when others dislike the business or build when others are fearful because these things don't go down forever as you know. So while the down cycle has lasted a long time we continue to play offense. Lean has allowed us to do that.
IW: It's often said that lean -- or any improvement methodology -- can't be sustained without commitment from the top. How do you communicate your commitment across the enterprise?
GK: We really view this as an enabler for our strategy, so as we speak to each other as an operating committee, as a team, we always are reminded that all of our strategy is enabled by lean.
Pure recognition became critical to keep driving this. Coming to [training] graduation ceremonies, coming to associates' presentations and their projects is something I do and have done for years. I think that keeps reminding people of the importance.
We have communication boards in plants, where we share ideas among plants. We have associates come to our headquarters, share their stories, and we bring our leadership team in. When we do these, I expect that we assign the right importance, which means [senior leaders] attend, celebrate and don't let it slip off a main agenda.
We bring our board of directors into the facilities. Associates will show actual projects that they've done. We'll look at these kinds of continuous-improvement projects and metrics with the board so it's drilled from the top down. And we have a number of manufacturing chief executives on our board who are on their own journeys, so it's reinforcing.
MT: Greg mentioned lots of things we've done recently to show support, to recognize and celebrate the wins, but I've got to go back 10, 12 years ago because the commitment that was made then is still having a lasting impression today. What Greg did was twofold: One, what he said is, 'I support going out and training every North American associate,' which at that time was over 4,000 people, in weeklong experiential training. That came with a tremendous cost, of which the benefit could not be finitely defined at the time. It was a bit of a leap of faith that we were going to get that benefit back over time, which we did. The second one is he then went in and did the training himself. He went through the exact same training that 4,000 hourly operators and salaried folks were going through at the exact same time. That was a powerful display of support to everybody.
IW: The recent recession hit many companies hard and economies around the world continue to struggle. Has your Lean Six Sigma approach helped you weather the recession? It sounds like you are taking it global.
GK: We're working a lot now about how do we take a breakthrough in the Philippines, say on a die change, and get it known all over the world in one minute or one hour or two hours. A lot of companies are global but they run a portfolio of little empires.
We're doing Lean Sigma projects around the world. As a company we're only about 30% U.S. so while our position continues to grow in the U.S. market, we're really managing a global continuous-learning, continuous-waste-elimination enterprise. So we're taking that lean toolset global, sometimes slightly modified relative to individual cultures or experiences. It's helping us fund our growth; it's providing access to financing, and it's allowed us to enter new markets, really leveraging the know-how from the developed world into the developing world.
"At the same time, in the developed world it allows us to get through very tough times. Spanish demand has fallen 50%, for example. We're the leader in Spain, but because we really allowed ourselves to keep getting better, we can make money in a market that has fallen by 50%.